Research

This comprehensive report examines the geopolitical tensions, environmental concerns, and debt sustainability challenges associated with Chinese investments under the Belt and Road Initiative (BRI). Drawing on publicly available sources, it focuses on seven countries across Central Asia and the South Caucasus, including Azerbaijan, Armenia, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, with particular attention to loan mechanisms and environmental implications.

The findings reveal that Chinese investments in Central Asia have contributed to growing debt burdens and environmental degradation. In contrast, while the scale of Chinese investment in the South Caucasus is comparatively modest, it still poses environmental risks and suggests potential debt vulnerabilities, particularly in Georgia.

The report highlights China’s global environmental commitments, such as emission reductions and forest stock expansion, including its pledges under the Paris Agreement. However, implementation of these commitments remains inconsistent, often encouraged by weak local governmental approaches to environmental standards in both Central Asia and the South Caucasus.

The analysis concludes that China’s international lending practices are characterized by a lack of transparency, with a preference for official loans over aid. These loans typically carry higher interest rates, shorter maturities, and are often collateralized against project assets, features that contrast sharply with the more concessional terms of Western financing. In the South Caucasus, Chinese loans tend to benefit China by promoting exports and deepening trade dependencies. In Central Asia, Chinese financial influence is more substantial, with countries like Kyrgyzstan and Tajikistan facing significant debt distress, raising concerns about asset loss and long-term economic vulnerability.